Estate Planning Law Report: July 2013You Can Now Designate A Beneficiary For The Title To Your Vehicle

Now that the Arizona Legislature has adjourned for the year, the newspaper no longer has stories almost every day about the latest proposed legislation, presenting someone’s brilliant idea for solving this or that monumental societal problem. I don’t worry about it too much because most of them never become law anyway.

Once in a while, however, a bill that actually does something useful and practical gets adopted but gets little or no attention. The latest such occurrence is the adoption, in 2011, of a bill authorizing the creation of the Beneficiary Designation For Vehicle Title Transfer Upon Death. It’s Arizona Department of Transportation, Motor Vehicle Division Form 96-0561, and it’s available on the Motor Vehicle Division’s web site (www.azdot.gov/mvd).

The form, as the title implies, allows you to designate one or more individuals to whom your vehicle title is to be transferred, if you are deceased. The form instructs that it is to be “stapled to and presented with the current title, and is void if altered or erased.”

The form also contains a very helpful description of the options for designating joint title holders on a vehicle title. Although the form does not clearly say so, the description of those options is provided so that if you name two or more individuals as the beneficiaries on the form, you can choose the correct designation to indicate what you want to happen if, or when, the vehicle is later sold or one of the beneficiaries dies.

You get three choices for designating multiple beneficiaries on the form:

or

and

and/or

What, it isn’t obvious what those mean? I suppose the first two are fairly obvious, but what does “and/or” mean?

Read the descriptions carefully before you choose a designation, because that’s what will be shown on the new title for the vehicle. And don’t alter or erase on the form. If you get it wrong, get a new form and do it over. Your signature does need to be notarized, so get it right before you sign. And keep it with your title (the MVD doesn’t get it unless and until you are deceased).

The appropriate designation on the beneficiary designation form will clarify what happens to the ownership of your vehicle in the future, and can make later transfers easier.

This method of titling a vehicle is similar to another set of Arizona laws that allow you to name beneficiaries on bank accounts and other types of financial accounts. The difference is that those beneficiary designations must be made on the records of the bank or financial institution. Like the beneficiary designation for your vehicle title, the beneficiary designations on accounts can be changed any time while you are still living.

And you can do the same thing with your house or other real estate by signing and recording a beneficiary deed. I know I have written here previously about that.

All of these methods of naming beneficiaries can be useful because they allow the assets that have the beneficiary designations to be transferred directly to the beneficiaries without the need for a court proceeding to administer your estate.

There are some situations where a beneficiary designation might turn out to be less efficient than an estate administration, however. A beneficiary designation isn’t practical if you have too many individuals named as beneficiaries. If you have, let’s say, eight beneficiaries who you want to share in the proceeds of an account or a vehicle, it might be better to handle that in your will.

IS THERE MOMENTUM FOR AN OVERHAUL OF THE FEDERAL TAX CODE?

The urgent need for change in the federal tax system is now officially mainstream. On July 22, 2013, USA Today editorialized: “As anyone who dreads April 15 knows, the code is a farce that wastes taxpayers’ time and money, caters to the influential lobbies and corrupts Congress.” They called the code “disgracefully complex” and said that the $160 billion (that’s $160,000,000,000) spent on compliance every year is “nearly double what the federal government spends annually on highways, bridges, airports and other transportation projects.”

Maybe there’s hope for relief from the fiasco that is the federal income tax. According to a letter written by U. S. Senators Max Baucus and Orrin Hatch, dated June 27, 2013, Congress has made more than 15,000 changes to the federal tax code since the last major rewrite of the code in 1986. The Senators are working on what they call a “blank slate” approach to federal tax reform, meaning that the reform they intend to propose will start with “a tax code without all of the special provisions in the form of exclusions, deductions and credits and other preferences that some refer to as ‘tax expenditures.’”

But then there’s the report from Bloomberg.com on July 23 that says this: “Only a small percentage of U.S. taxpayers benefit from the ability to deduct mortgage interest on a second home. That group just happens to include many of the people who craft the nation’s tax laws. Members of the congressional tax-writing committees are eight times more likely than the average American to own a second home with a mortgage….”

Will anything happen? We shall see.

QUOTE OF THE MONTH

A “No” uttered from deepest conviction is better and greater than a “Yes” merely uttered to please, or what is worse, to avoid trouble.

The information contained in the Law Office of DeConcini McDonald Yetwin & Lacy P.C. web site is provided for informational purposes only, and should not be construed as tax or legal advice on any subject matter. The Firm provides legal advice and other services only to persons or entities with which it has established a formal attorney-client relationship.